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Obit: Western-Wear Retailer Unhorsed by Suppliers

A look at how poor supplier relations, earthquake damage to 12 stores, and a fizzled fad for cowboy cool sent Howard Phil's Western Wear to the last roundup. A business obit.
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THE BUSINESS: Retailing western-style apparel and accessories
OPENED: October 1963
CLOSED: May 1999
PRIMARY CAUSES OF DEATH: Poor relationships with suppliers; California earthquake; market downturn

The ostrich-hide cowboy boots that U.S. Representative Howard P. "Buck" McKeon sports on Capitol Hill aren't just for show; they're part of his heritage. Before the California Republican was elected to Congress for the first time, in 1992, with his four brothers he had run a business: Howard & Phil's Western Wear, a family-owned retail chain known for its cowboy boots and attire.

But during the seven years since McKeon hung up his spurs, as it were, at the company's headquarters in Santa Clarita, Calif., Howard & Phil's fell on hard times. A fad-driven surge in the American market for western wear fizzled. In January 1994 a California earthquake damaged 12 of the McKeons' leading stores. The chain's relationships with its suppliers deteriorated, causing some of them to tighten credit, say industry sources. However, one of the brothers, Joseph McKeon, says the company's problems with its suppliers stemmed, in large part, from a deadlock in negotiations over credit terms when Howard & Phil's entered Chapter 11 bankruptcy, in 1996.

In that year one important supplier, Justin Boots, refused to deal with Howard & Phil's at all. "If you're a western store and you don't carry Justin Boots, you're sunk," notes Randy King of King's Western Wear, in Studio City, Calif. And sunk Howard & Phil's was, even though it limped along for three more years.

The company's early years also had been a struggle. In 1963 the McKeons' parents, Howard and Phyllis, had founded the business in a sparsely populated area of California, taking out a $20,000 mortgage on their home. "There were days when they didn't do any business at all," Buck McKeon recalls. "There were weeks when they couldn't buy groceries."

But the elder McKeons kept buying -- and selling -- boots. By the 1970s, when the brothers took over, there were 12 stores. Riding a crest in demand created by such pop-culture forces as
Urban Cowboy (the 1980 film featuring John Travolta), the brothers expanded rapidly for more than a decade. They opened new stores in topflight malls, not only in California but also in Nevada, Arizona, and Utah. The number of stores peaked at 55, and revenues swelled to $44 million.

But the McKeon brothers' luck didn't hold. The waning of the western-wear craze caused an industrywide slump, crimping the company's sales. The California earthquake made it a one-two punch; Howard & Phil's lost sales in the damaged stores and had to shell out money for repairs. Wary about the chain's wobbliness, some suppliers refused to restock the stores' shelves unless the McKeons paid cash on delivery.

To retrench, the brothers began closing stores. But their retreat actually hastened the company's filing of Chapter 11 when the chain sought protection from a claim by one California landlord who owned several malls where Howard & Phil's had vacated leases.

To acquire more merchandise, the McKeons arranged for a line of credit. There was a hitch. As collateral, they had to pledge their sparse inventory, which greatly constrained their borrowing power. "Rather than trying to beef up inventory, they should have closed more stores and spread the existing inventory among the stores they had left," says Dan Harrow, a financial adviser retained by the creditors' committee. "They were dying for product."

Although the McKeons did eventually whittle the number of stores down to nine, it was too little too late. In May of this year, assets with a full retail value of $3.8 million fetched $425,000 in a liquidation sale that expunged the remnants of the McKeons' business. Even Geoff Berman, whose company, Development Specialists Inc., sold off the stores' assets for the benefit of creditors, couldn't help reminiscing about its better days: "My wife bought my first pair of boots at Howard & Phil's."

Last updated: Nov 1, 1999




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